FAIS Credits and Competence

Over the last two weeks we received a number of enquiries from readers regarding the regulatory exams and credits.

How many credits do I need to to qualify to write the REs?

Do I get any credits for writing the REs?

Where can I obtain extra credits?

The following is a brief history lesson, not a legal treatise to be used as the gospel according to Paul.

Between 2004 and 2009, little monitoring was done to regulate the quality of training available to FSPs. There were guidelines, but no quality control, leading to FSPs being duped by training providers into completing a qualification or skills program which was not SAQA approved.

In order to bring some sanity to the situation, the FSB decreed, as an interim measure, that all FSPs and representatives had to have a minimum of 30 or 60 SAQA approved credits by the end of 2009 in order to stay in the industry.

As indicated above, this was an interim arrangement, while the regulator held discussions with the industry to determine what competence, knowledge and skills would be required to provide financial advice and intermediary services as decreed by the FAIS Act, going forward.

We asked Paul Rabenowitz, of Lightbulb learning and training, for his views.

Competence in terms of the FAIS Act consists of the following four components:

Regulatory examinations

Qualification

Experience

Continuous professional development (CPD)

The regulatory examinations, qualification and experience requirements can be attained on a once-off basis while CPD is an on-going process of ensuring that knowledge and experience remains up to date with the latest developments in legislation and financial products.

The knowledge component of competence is made up of the regulatory examinations and a qualification.

Prior to 2010, a sole proprietor, key individual or representative had to attain a suitable qualification or credits, depending on the subcategories registered in. Since the introduction of Board Notice 106, as from 2010, credits are no longer applicable and instead one must have a full, recognised and approved qualification as listed in Board Notice 105.

Over and above an approved and recognised qualification, a sole proprietor, key individual or representative must have passed the relevant level 1 and 2 regulatory examinations, unless they possess a qualification that allows them an exemption from the level 2 RE.

The revised fit and proper regime therefore makes provision for two kinds of knowledge requirements, both of which must be attained – a qualification AND the regulatory exams (unless a suitable qualification provides exemption from the level 2 exams

What is the educational recognition of the REs?

In short – there is none. The regulatory exams are not listed or approved by SAQA as a qualification. Much like the Bar exam taken by candidate attorneys and other professions, the regulatory exams are a legislated competency test to allow one to practice in this profession while a qualification is the knowledge base which a practitioner uses to practice.

Credits then, merely for the sake of credits, are no longer valid currency, in a manner of speaking, unless it forms part of the buildup to a full, approved qualification which will consist of a number of credits, depending on the level and scope of the qualification.

The industry is holding its breath for the announcement of the roll out of the level 2 REs. Currently, the official deadline for completion is the end of 2013, but it is highly likely that this date will be extended.

It is clear that learning will remain part and parcel of the modern advisor’s ongoing obligations. We recommend that you make no long term commitments in this regard until we see the “what” and “how” of the level 2 REs.

Nobody has time for duplication, or re-doing things, especially these days.

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